Walker Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:

-The change in Inventory will be shown as a negative cash flow in the adjustments to Net Income.

Question

Walker Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
  
-The change in Inventory will be shown as a negative cash flow in the adjustments to Net Income.

Quizplus · Accepted Answer

If the inventory increased during the period, it means that cash was used to purchase more inventory. Therefore, it would be shown as a negative adjustment in the statement of cash flows.